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When the media circus surrounding the Hayne royal commission finally dies down, the financial services industry faces an uncertain but exciting future.
The big banks and superannuation funds have nowhere left to hide. Commissioner Kenneth Hayne and his counsels assisting have been doing an impressive job sniffing out the truth and revealing the complex web of misconduct that has entangled the financial services sector for decades.
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The Australian public has taken a keen interest in the financial services royal commission. Even those who don’t care for finance have an opinion about it. Financial news typically draw bigger crowds every seven to 10 years, or whenever things go awry (2008, for example).
Watching the fat cats squirm under pressure at royal commission hearings has been exciting in a perverse sort of way. Besides, a consumer uprising has been on the cards since the global financial crisis. Few people really understand what exactly went wrong, but they know it was bad and they are still resentful about it.
Now, it looks like the power may soon be in the hands of the customer. Consider that for a moment.
By the time commissioner Hayne delivers his final report on financial misconduct in February 2019, most of the major changes will be well underway. I envisage more divestments of non-core assets by the banks. Insurance and wealth businesses will be sold or de-merged. CBA, NAB and ANZ have already seen the writing on the wall.
Westpac is still holding onto BT Financial Group, but that will certainly be one to watch over the coming months.
There are plenty of cross-currents impacting the direction of financial services besides the royal commission: open banking, artificial intelligence and robo-advice, to name a few.
But the biggest change could be missed completely by companies that get too caught up in regulatory rumblings and self-centred fear following the royal commission. And that’s the change in consumer attitudes towards the entire financial system.
It doesn’t matter whether you’re a bank, a fund manager, a superannuation fund, a financial planner or a mortgage broker. To Joe Public, you’re a cog in the big bad machine that has been pulled apart by the royal commission and exposed.
The most valuable acquisition financial services players of all stripes can make over the coming years won’t be new robots or platforms. It will be the trust of the consumer.
Winning someone’s trust isn’t easy. Particularly after they feel they’ve been betrayed. The rebuilding of that relationship between financial services and consumers will be long and hard. Many won’t be able to do it. For those that do, the future looks very bright indeed.
The financial services industry of tomorrow will look very different to the one we’re watching commissioner Hayne dissect today.
Companies that can identify what their customers need and, critically, understand how satisfying those needs improves the lives of those customers, stand to gain the most in years ahead.
[Related: ASIC warns lenders not to outsource responsibility to brokers]
